THE government’s tariff-lowering on agricultural commodities must be accompanied by measures boosting domestic production, analysts said.
“It is crucial that for this policy to work that programs intended to increase productivity be initiated at the same time to support producers who may be adversely affected,” Ateneo de Manila economics professor Leonardo A. Lanzona told BusinessWorld in an e-mail.
Mr. Lanzona said that a comprehensive industrial policy should ensure “greater utilization of domestic resources,” alongside reforms that will support the short-term needs of domestic producers.
“I am in favor of removing all forms of tariff that limit the entry of basic commodities to consumers and provide protection to selected group of industries,” he said.
“However, while this policy may benefit consumers, this can prove detrimental to firms and other producers, making this policy unsustainable,” he added.
Industrial policy should promote expanded exports, which will generate resources to import goods that the Philippines cannot produce efficiently, he said.
In March, the Tariff Commission (TC) announced that it has started a comprehensive tariff review of the most-favored nation (MFN) tariff schedule covering the period 2024 to 2028.
The review is undertaken every five years to adjust the MFN tariff schedule as authorized by Republic Act No. 10863 or the Customs Modernization and Tariff Act.
The Management Association of the Philippines has asked the National Economic and Development Authority (NEDA) to consider reducing tariffs on agricultural products to ensure the affordability of produce.
Citing a TC report, it said that the average tariff applied on agricultural products is 12% while the average for all products is 8%.
Jesus C. Cham, president emeritus of the Meat Importers and Traders Association (MITA), said the meat industry cannot continue to supply directly to supermarkets with a target retail price due to “uncertainty over the tariff rates.”
In May, MITA also urged NEDA to further lower tariffs on imported pork as the current tariff rates are set to expire by the end of the year.
“Industries have been over protected. Economists say that protection should not exceed 5 years, but in our case it is already 27 years. As a result our industry constantly demanded protection and use high tariff in lieu of becoming competitive,” he said.
Raul Q. Montemayor, national manager of the Federation of Free Farmers, said via Facebook Messenger that lower tariffs for rice, pork and sugar “have not proportionately reduced retail prices.”
“Without measures that will enhance the competitiveness of the affected sectors and help them cope with diseases and other emerging problems, the lowered tariffs will only discourage domestic production and make us even more dependent on imports for our basic food needs,” he said.
He also said that the proposal to reduce tariffs “goes against the assurances made” during hearings for the Regional Comprehensive Economic Partnership treaty. The farm industry had been assured that tariffs on sensitive products will not be touched, he said. — Sheldeen Joy Talavera